17/03/2010 (Forbes), Geneva - Swiss food and beverage company Nestle SA says it dropped an Indonesian palm oil supplier over concerns about the company's environmental record.

Nestle ( NSRGY.PK - news - people ) says it stopped buying directly from Sinar Mas Group "recently" following its own investigation into damage caused to rain forests and peat fields in Southeast Asia by palm oil plantations.

Environmental groups have criticized Nestle for using palm oil for products such as its KitKat chocolates. Greenpeace claims some palm oil plantations destroy the habitats of endangered species such as orangutans.

Nestle spokesman Ferhat Soygenis said Wednesday the company can't yet guarantee that palm oil sourced from other suppliers is sustainable.